SOLUTION: Joe secured a loan of $12,000 3 years ago for use towards his college expenses. The bank charged interest at the rate of 4% compounded monthly on his loan. Now, he wishes to repay

Question 1133530: Joe secured a loan of $12,000 3 years ago for use towards his college expenses. The bank charged interest at the rate of 4% compounded monthly on his loan. Now, he wishes to repay the loan through monthly payments over 10 years at the same interest rate. Find the size of the monthly payment he must make.
Found 2 solutions by addingup, MathTherapy:
Answer by addingup(3677) (Show Source): You can put this solution on YOUR website!
12000(1+(0.04/12))^12*3 = 12000*1.12727 = 13527.24 this is the accumulated debt over three years.
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Now he will repay on monthly payments over 10 years:
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120 payments
0.04/12 = 0.003333 monthly interest rate
.
1 + 0.003333 = 1.003333
1.003333^120 = 1.49077
1 - 1.49077 = 0.49077
0.003333/0.49077 = 0.00679
0.003333 + 0.00679 = 0.010123
.
13527.24 * 0.010123 = 136.93 (round it to 137) each monthly payment
.
Happy learning

Answer by MathTherapy(10549) (Show Source): You can put this solution on YOUR website!

Joe secured a loan of $12,000 3 years ago for use towards his college expenses. The bank charged interest at the rate of 4% compounded monthly on his loan. Now, he wishes to repay the loan through monthly payments over 10 years at the same interest rate. Find the size of the monthly payment he must make.

Correct answer:
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